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Pound could soon be worth just one euro
Hugo Duncan and Sri Carmichael5 Dec 2008
Sterling was today on course for its worst week ever against the European single currency, raising the prospect of a one pound euro.
The pound traded at 87.2p per euro, meaning it has lost five per cent since opening the week at 82.7p - the largest fall since the single currency was launched in 1999. It is down 20 per cent on a year ago.
The pound also fell 0.10 cents against the US dollar to $1.468, leaving sterling down 30 per cent from its peak of more than $2 in the summer.
It means skiers face record costs this winter on ski passes, hotels and meals in Europe and North America.
Analysts warned the rapid deterioration of the UK economy and further cuts in interest rates mean a one pound euro is now a possibility.
One broker said the pound is heading for "near parity" with the euro in coming months as the Bank of England slashes rates and the recession deepens.
Others cautioned that with the European Central Bank also cutting rates in the eurozone, it may not go that far. Philip Shaw of Investec said: "Who can rule anything out in these markets, but you would need truly abysmal news for sterling to fall another 15 per cent or so against a currency whose economy is struggling as well. Possible, but unlikely."
A spokesperson for the Ski Club of Great Britain said: "These currency fluctuations will really affect how much it costs to eat out and enjoy yourself in resort so people will probably spend less while they're on skiing holidays. The cost of packages has been affected but many people booked months ago when the pound was stronger.
"If you want to do a do-it-yourself holiday and buy different parts of your holiday, like ski hire and accommodation, separately you'll be more affected by the exchange rates."
Reader views (7)
If the so-called experts were really being "honest" with us then they would have already informed us that the reality of the situation going forward is that "the value of the pound could soon be LESS that one euro"!
- Fraser, Telford Park, 07/12/2008 13:09
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what about my pension,after all i did work in england for it but now its worth practically nothing and the future looks even worse
- Linda, italy, 07/12/2008 10:42
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Once again the UK's backwardness on economic matters is costing its citizens dear. Join the eurozone now, whilst we still command a modicum of respect on the continent. The alternative , of course, is to join later, as beggars.
- Alan, Islington, 06/12/2008 15:16
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Everyone in Ireland's counting 'our lucky charms' that we have the euro.
In these uncertain times business need stability - the pound is crashing and I certainly wouldn't invest money in any company in the UK.
- Ian Sankey, Dublin, 06/12/2008 15:02
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I live between London and Spain. The situation in the continent is far worse than in the UK. It is good that there's independence from a central committee. The economies vary across EC countries and some are suffering more than others, so a lot are just caught up without a say. I Also notice that people here don't talk as much about the crisis as in the UK, but the businesses are closing and people are being laid off by the thousands.
Believe me, The Euro will hit the ground too! A few months and we all see. Euro and US dollar will reach parity as in old times. Europe needs it too. The Pound will survive a 20 to 30 percent above them.
- Maria, London and Spain, 05/12/2008 17:33
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Some well known geo political scientists warn that the Euro is headed for the pits. Watch this space.
- Jas, Camberley UK, 05/12/2008 17:14
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In that case is there anywhere we ex-pats can receive compensation? Not all ex-pat pensioners receive the heating allowance particularly those who left the UK before it was introduced. If the regulations governing this could be ammdended it might prove to be of some help otherwise I am of the opinion that, unless we receive some consideration, we may have a worse situation than our counter parts in the UK!!! It is a question now of BOE 2% verses 2.5% CEB and the unfortunate attitude of the currency speculators. If only there were some people in position who could help we should be grateful.
- Arthur Lincoln, .., 05/12/2008 15:19
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